Stossel sticks up for discrimination

John Stossel doesn’t like racial discrimination any more than you do, but his latest column explains why discrimination in other forms can be a good thing.

Even Bill O’Reilly lectures me that government should ban discrimination against those with pre-existing conditions. Most Americans agree with him. Who likes discrimination? Racial discrimination was one of the ugliest parts of American history. None of us wants to be discriminated against. But discrimination is part of freedom. We discriminate when we choose our friends or our spouse, or when we choose what we do with our time.

Above all, discrimination is what makes insurance work. An insurance regime where everyone pays the same amount is called “community rating.” That sounds fair. No more cruel discrimination against the obese or people with cancer. But community rating is as destructive as ordering flood insurance companies to charge me nothing extra to insure my very vulnerable beach house, or ordering car insurance companies to charge Lindsay Lohan no more than they charge you. Such one-size-fits-all rules take away insurance companies’ best tool: risk-based pricing. Risk-based pricing encourages us to take better care of ourselves.

Car insurance works because companies reward good drivers and charge the Lindsay Lohans more. If the state forces insurance companies to stop discriminating, that kills the business model.

No-discrimination insurance isn’t insurance. It’s welfare. If the politicians’ plan was to create another government welfare program, they ought to own up to that instead of hiding the cost.

Mitch Kokai / Senior Political Analyst

Mitch Kokai is senior political analyst for the John Locke Foundation. He joined JLF in December 2005 as director of communications. That followed more than four years as chie...

Reader Comments

  • Pops

    This is exactly why the right wing activists on the SCOTUS will get it wrong tomorrow morning when the health care announcement is made.

    Health insurance is distinctly different from other insurance markets and yes, the broccoli market.

    People do not have a choice when and how they get sick. Period. So when insurance companies discriminate, either two things happen: We either let the sick whither away in front of our eyes, or the gov picks up the tab.

    Because we are a compassionate country, we make it illegal for people to not get medical attention. They go to ERs and usually at the taxpayers expense.

    We can either bury our heads in the sand and pretend like free markets can handle our health needs (as stossel does) or we can own up to the problem and provide universal care.

    Free markets just don’t work 100 percent in the health care market. Every industrialized country on earth knows this. What’s taking us so long?